Large numbers of commercial buildings have sought to improve their energy and environmental
performance, with half of all leasable U.S. offices now designated at some level of “green”. All
proper/es fall somewhere on the green/high-‐performance spectrum (above and below
average) whether or not they bear a formal label or ra/ng.1 Varia/ons in the level of
performance can either posi/vely or nega/vely influence value. This component of value can be
shaped by many factors, from u/lity costs to tenant/owner preferences that translate into
income (rent levels, vacancy rates, lease-‐up /mes, etc.). Occupant percep/ons of indoor
environmental quality are another poten/al influence on value.
While there has been liYle uptake of this thinking by prac/cing appraisers, the increased
prevalence of green/HP prac/ces combined with concerns about appraiser competency are compelling
the industry to adapt their tradi/onal techniques to this new driver of value. However, the overly
narrow focus of policymakers on appraisal of labeled or rated exemplary buildings (e.g., LEED or
ENERGY STAR Cer/fied) represents a significant missed opportunity. Any level of green or energy
performance can in fact influence value, including below-‐average performance (a.k.a. “brown
discount”), irrespec/ve of whether or not the building has been formally rated. Another
surmountable challenge is the limita/ons to non-‐appraisers’ understanding of the appraisal
process (and constraints therein). A crucial byproduct of this is unrealis/c expecta/ons of what
appraisers can and will do in the marketplace.
This report iden/fies opportuni/es for catalyzing improvement of the green/HP appraisal process,
which apply to all involved actors—from owner, report-‐ordering client, the appraiser, and the
appraisal reviewer—and fostering more demand for appraisals that recognize green/HP property
aYributes. The intended audience is primarily the public policy community and other stakeholders
outside the formal appraisal community who can contribute to the broader effort to advance
professional prac/ces. The discussion begins with a descrip/on of the appraisal process and the
points at which green/HP considera/ons can enter the analysis. A series of
major barriers to beYer prac/ces are iden/fied along with approaches to reducing them.